Did you know that pricing is one of the biggest challenges in business? It’s true! Get it right and your business runs beautifully, attracting lovely customers and making you a great living. Get it wrong and you barely make a profit, even though you’re working like crazy.
I was talking to a lady recently, who was working way too many hours for not enough money.
She was burned out, fed up and broke. She knew something had to change before she gave up altogether but she was scared of getting it wrong. She was scared to raise her prices because, even though she wasn’t making any money at the moment, she was convinced if she put up her prices nobody at all would buy. She thought she just needed to work harder and get more customers, but she was already working way too hard.
She was in a price trap where she didn’t have enough hours in the day to make the money she needed and her current business model meant it could never grow.
I had to give her some tough love. I told her she had an expensive hobby, not a business. By the time she factored in all the hours she was working, her hourly rate was a pittance and she wasn’t making a profit. I told her she was too cheap and giving out all the wrong signals, attracting bargain hunters and people who didn’t value her. And I told her she needed to change things fast before she made herself ill.
My biggest piece of business advice for her was to VALUE herself and her skills and put up her prices a LOT.
She was really shocked but she soon realised what I meant.
What To Do If You’re Attracting The Wrong Buyers
Even though this lady had probably known this for ages, she had been scared to put up her prices because she thought no-one would buy. And people were buying but they were the wrong people – people who wanted cheap products rather than those who wanted GOOD VALUE (There is a BIG difference). She was marketing (verging on spamming) in local selling groups and trying to compete with cheap prices online and yes, she was selling, but at what cost? Something had to give.
When we worked through the numbers it became very clear very quickly that if she targeted a different type of customer she could charge more for her beautiful products.
She would need to make some big changes starting with her mindset. Instead of thinking of herself as ‘little old me’ who can’t charge much because nobody will pay, she needed to start thinking like a BUSINESS OWNER. Someone who sells an amazing product that the right people will adore and will happily pay a premium for. She had to start valuing her time and skills, her experience and expertise.
We worked together to help her understand her value. The products she created were far better than the stuff selling cheap on Amazon and Ebay and yet she had been trying to compete with them. She realised the people buying those things were buying based purely on price. They weren’t bothered about quality or service, they just wanted a cheap commodity.
Her products were better. They were beautifully made. The quality was amazing, from the sustainable materials she used to her eco-packaging. She was passionate about creating products that would last a long time and even be handed down through families. Her customer service was fantastic.
She quickly realised there were a few different groups of people who would happily pay more, she just had to pick one and start marketing to them.
The Super Customer Marketing Journey
Instead of trying to find customers in local ‘buy and sell’ groups as she had been, she instead needed to figure out where her Super Customers were looking. After a little research we worked out that, with a few changes to her product photography style and some hashtag research, Instagram could really work for her.
She was already using Facebook but her page fans were the wrong sort of people, so she needed to start attracting more of the right people. She could do that by changing her behaviour on Facebook and instead of acting like a bargain-basement business, she needed to reposition herself as an artisan making handmade creations that oozed quality. It would take some time but gradually her fan base would change and Facebook could become a really effective marketing tool for her.
We talked about sharing her journey, from design scribbles to materials, work in progress, finished items, little touches, packaging and also a new focus on her, as a maker. Weaving her story into her online presence, sharing her inspiration, talking about why she did things the way she did, why she loves what she does – that personal thread running through a business is a game-changer. It’s not about price, it’s about the journey of amazing products from idea to completion.
I told her I often buy gorgeous things on Facebook and Instagram exactly because of this approach. Watching a sketch take shape and come to life is magical. Many’s the time I’ve already decided I’m going to buy something even before it’s finished because I feel that I’m part of its journey. From felted bees to oil paintings, embroideries to cookies to make-up bags, I bought them all this way.
She realised she had just got herself into a ‘cheap’ mindset and it nearly broke her AND her business BUT it was reversible. She saw that she could reposition her business and she got very excited. She had looked at other makers featured in magazines and online and never dreamed she could be in the same league and yet, there was nothing stopping her other than her self-belief. Yes, it would take some time but the sooner she started, the sooner it would happen.
Do You See The Shift?
Do you see how things changed from an attitude of ‘I have to be cheap to compete with Ebay sellers’ to ‘I’m a skilled maker and the things I make are unique, beautiful and valuable’? Do you see how that would change a business beyond recognition?
Which would you rather have? Which would you rather be?
As soon as you realise your value and your worth, the energy in your business changes. Your marketing takes on a new feel. Your prices increase to reflect the quality and the journey of your work. You start to make a really nice income AND you attract customers and fans who adore you and your work.
A few weeks after repositioning her business and putting up her prices she started attracting the RIGHT kind of customers. She deleted all her ‘cheap’ posts from social media and gave her website a mini-makeover. She looked on Instagram and Pinterest to see how other makers were using props and lighting in their product photos and she learned fast.
She started sharing her journey. She started building online relationships with other makers and artisans and shared their beautiful work on her social media with no expectation of them returning the favour, but guess what? Some did! And even for those that haven’t (yet) the fact she was sharing their gorgeous (not cheap) things helped to position her and her business in the right way. It elevated the perception of her business into a higher league.
None of this cost her much money – it just took a weekend of online tidying-up, research and learning.
The best thing is it’s going to get better and better for her. She is gaining confidence. She is attracting new fans. She’s enjoying doing her marketing and social media. She is feeling more inspired and creative. And she has to work fewer hours to make the same money. Yes, she lost a few people and had the odd grumbler but her business needed to let them go, they were the wrong fit and were keeping her stuck in the price trap.
So, Why Do Business Owners Struggle With ‘Proper’ Pricing?
Well, I reckon a lack of confidence and that pesky ‘little old me’ syndrome have a lot to answer for when we talk about pricing. Loads of people accidentally fall into the price trap because they don’t know any better and they don’t feel confident enough to charge what they are worth.
Let’s look at how most people price their products and services – maybe this is how you did it, too?
- You look at what your competitors are charging and opt for prices just above or just below them, depending on where you believe you rank in the pecking order (which can have damaging consequences if you’ve made the decision on a day when your confidence is low!)
- Perhaps you’ve asked your friends and family what they think and been greeted by a sharp intake of breath.
- Maybe you started off well but a catty comment by a ‘bad-fit’ customer knocked your confidence and convinced you you’re too expensive?
This happens all the time. For many small business owners, pricing seems to be a particularly emotive topic and one we take personally.
- We worry that we don’t have enough experience or we’re not good enough to charge ‘proper’ prices
- We fixate on what our competitors are charging without questioning whether they are right
- If we can’t find out what others are charging, we worry we’re getting it completely wrong
- We also fear being judged by others. After all, perhaps other people might think you’re getting a bit too big for your boots if you put your prices up? You know what I mean, the voice in your head that worries people are saying ‘who does she think she is?’
- Then of course there’s the fear that you might lose customers or not attract new ones
Do any of these seem like a proper, sensible pricing strategy a ‘proper’ business owner would create? Or do they all seem a bit knee-jerk and random? Hmm?
So, Are You Caught In A Price Trap?
- Are you working too hard for not enough money?
- Are your prices based on the value you bring or are they based on what other people are charging?
- How can you reposition your business to attract better customers who love what you do and are willing to pay for it?
- Even if you don’t completely scrap your current product or service range, maybe you can create a luxury or VIP tier? You can focus all your marketing on your higher-end offerings. That way you can transition out the ‘bad-fit’ buyers and unprofitable offerings without removing your income (however meagre).
The only way to do it is to do it. Be brave. Dig out that self-confidence and go for it. In a few weeks you could have a completely new business and you won’t look back.
And what’s the worst that can happen?
Nobody buys, right?
Well that’s just a sign that you need to keep tweaking and keep marketing.
- Make sure you’re walking the talk. Make sure your marketing is up to scratch, that your website reflects your new higher-level business and that your social media is on point.
- Focus on the VALUE you bring to your Super Customers.
- Share your journey as you develop your products and services.
- Engage your audience. Talk about what your products and services do for them. How will they help? What difference will they make? Why are YOUR products and services a cut above the rest?
- Keep marketing. Keep tweaking. Keep marketing. Repeat.
It doesn’t matter whether you sell HR training or make handbags, the principles are the same. Get really clear on the value you bring. Understand how it makes your Super Customers feel, then charge what you’re REALLY worth.
Let me know how you get on and good luck! You’re awesome.